Audit Questions Oversight of Ill. Education Agency

A state audit has raised serious questions about accountability and
oversight at the Illinois education department and about Superintendent
Joseph A. Spagnolo's stewardship.

The voluminous report, released March 12 by William Holland, the
auditor general, describes a "breakdown in the fundamental principle of
administration" of the agency's $23 million operational budget. It
cites 45 examples of what the auditors see as mismanagement and other
errors, including inadequate oversight of federal grant programs,
personnel, and contracts.

The audit, which covered the two years that ended June 30, 1996,
also cites "deficiencies in control" over Mr. Spagnolo's travel,
headquarters, and other expenses.

The report comes at a critical time for Republican Gov. Jim Edgar
and Illinois lawmakers, who seem poised to revamp the state's school
funding formula after years of political wrangling. Schools in the
state receive most of their money from local property taxes, and wide
spending disparities exist between property-rich and poor school
districts. ("Odds Seen Better for
Funding Reform in Ill.," Feb. 5, 1997.)

The state audit, said Larry McNeal, an associate professor of school
finance at Illinois State University in Normal, could erode support for
reform efforts.

"It's diverting attention from the vital issue of providing
resources and a quality education to kids," he said. "Critics will use
this to say, 'If there's that much money to mismanage, there's too much
money in the first place.'"

Gov. Edgar, who has been traveling the state to trumpet his ideas
for raising income taxes, lowering property taxes, and changing the
school distribution formula, said a review of the audit found "no
smoking guns." But some legislators disagreed.

"It's the worst audit I have ever seen in my 20-some years around
here," Senate President James "Pate" Philip, a Republican, told the
Copley News Service the day after the report was released. "It was very
poor management. ... I've never seen [an audit] that bad, ever."

Another leading gop lawmaker, Dan Cronin, the chairman of the Senate
education committee, told the news service that Mr. Spagnolo's hold on
the appointive position may not be secure.

"It's fair to say that, while I like [Joe Spagnolo] personally,
there are some serious questions that have to be answered," he
said.

No Plans To Leave

In an interview last week, Mr. Spagnolo conceded that "mistakes were
made" and that "record keeping was not as detailed as it should have
been" at the agency. But he said he had no plans to leave office.

"There was never a doubt about my staying. The board is supportive;
the governor is supportive," he said. "We've taken some positive steps
to address the problems and are anxious to get on with the business at
hand."

The state board appointed Mr. Spagnolo in June of 1994. His contract
expires in 1999.

The schools chief has been under fire since last fall, when
questions first surfaced about several highly paid consultants to the
agency, dozens of no-bid contracts, and excessive expenses for business
travel.

In December, a new law pared the state board of education from 17
members to nine and authorized Gov. Edgar to appoint members and name
the board's chairman.

At the time, several lawmakers asked the governor to appoint a board
that would oust Mr. Spagnolo. But the governor praised the
superintendent's education initiatives and supported his continued
tenure.

In January, the Senate confirmed five of the governor's new
appointees, including board Chairman Louis Mervis. But it delayed
confirming four returning board members until the state audit was
released.

On March 17, the senate voted 56-2 to confirm the returning board
members, and the new board met for the first time last week.

Oversight Plan

Kim Kanauer, a spokeswoman for the board said the audit has provided
the new board and the superintendent with an opportunity to develop a
systematic oversight plan that will better detail the use of the
agency's funds.

The plan, released this month in response to the audit, includes
monthly board meetings to review expenses, the retraining of the
agency's 700-plus staff members on bookkeeping protocol, and the
appointment of a "second in command" to Mr. Spagnolo who will work to
improve management of the agency and of the superintendent's
office.

In the coming months, a liaison from the U.S. Department of
Education will help the board revise its record keeping for $24 million
in federal grants.